Court Ruling Highlights Federal, State Discord Over Medical Marijuana

In 1991, amid the AIDS crisis in San Francisco, a former jazz and blues singer named Lynnette Shaw was hired as the intake officer at the San Francisco Cannabis Buyers Club, California’s first medical marijuana dispensary.

The modest Cannabis Buyers Club would eventually transform into a flamboyant weed emporium on Market Street that founder Dennis Peron dubbed “the five-story felony.” Shaw, who would partner with Peron in backing California’s Proposition 215 medical marijuana law, went another direction months before the initiative passed in 1996. She ventured across San Francisco Bay to establish California’s first locally permitted and regulated medical marijuana provider.

Peron eventually drew the ire of state narcotics officers, who raided his club. Shaw and her small-town marijuana dispensary, serving patients with HIV, cancer and other illnesses, drew something else: a nearly two-decade legal battle with the United States Justice Department.

In 2011, over protests from local officials, a federal seizure order shuttered the Marin Alliance for Medical Marijuana in the Marin County hamlet of Fairfax. Shaw was left destitute, ultimately living on welfare and food assistance.

But on Oct. 19, Shaw won a major court ruling that marijuana advocates hail as a potentially landmark rebuke to federal drug policies and government interference in states where cannabis is legal for medical or recreational use.

In a sternly written decision, U.S. District Judge Charles R. Breyer in San Francisco threw out a federal injunction against the Marin Alliance for Medical Marijuana. He ruled that the Justice Department was defying the will of Congress and improperly intruding on California’s medical marijuana laws.

This week, Shaw, who still lives in Fairfax, was celebrating and making plans to reopen the historic dispensary, launched in 1996 and licensed by the city in 1997. “I am looking at my Facebook page,” Shaw said. “I’m getting thousands of messages right now. I’m getting cheered all over the world.”

Breyer’s ruling was seen as a major test for an amendment to federal appropriations bills signed by President Barack Obama in 2014 and again this year that banned any expenditure of Justice Department funds to prevent states from implementing laws “that authorize the use, distribution and possession of medical marijuana.”

Marijuana advocates and the two California representatives who sponsored the amendment – Reps. Dana Rohrabacher, R-Huntington Beach, and Sam Farr, D-Carmel – called its passage an end to federal raids on medical marijuana providers in the Golden State and beyond.

But federal authorities, who in 2011 had launched sweeping raids and property forfeiture actions against California dispensaries, argued in court briefs that the Justice Department retained the right to enforce federal law against individuals or businesses. U.S. prosecutors said such criminal and civil “actions do not prevent a state from implementing its own laws” on marijuana.

Breyer last week provided a blistering rejection of the government’s argument. “It defies language and logic for the government to argue that it does not ‘prevent’ California from ‘implementing’ its medical marijuana laws by shutting down these same heavily regulated medical marijuana dispensaries,” he wrote.

Breyer’s ruling added: “Californians’ access to legal medical marijuana has been substantially impeded by the closing of dispensaries, and the closing of MAMM (the Marin Alliance for Medical Marijuana) in particular.”

Months before the judge’s ruling, Rohrabacher and Farr had sent a pointed letter to then-U.S. Attorney General Eric Holder. They took issue with public statements by Justice Department officials that they retained the right to prosecute medical marijuana cases in states, such as California, with legal medicinal use.

“As the authors of the provision in question, we write to inform you that this interpretation of our amendment is emphatically wrong,” the California representatives wrote Holder on April 8. “Rest assured, the purpose of our amendment was to prevent the Department from wasting its limited law enforcement resources on prosecutions and asset forfeiture actions against medical marijuana patients and providers, including businesses that operate legally under state law.”

After Breyer’s ruling, Shaw’s attorney, Greg Anton, declared: “The war on marijuana is winding down – and marijuana won.”

Unsettled landscape

Shaw’s battle with the government began in 1998, when the Justice Department won a court ruling to shutter the Marin Alliance and five other California dispensaries for violating the federal Controlled Substances Act by distributing medical marijuana.

Yet the government never enforced the injunction and the dispensary stayed open as Shaw filed legal appeals and even ran as a Libertarian and “marijuana peace” candidate for lieutenant governor in 2006, winning 142,851 votes – just under 2 percent – in the November general election.

In December 2011, then-U.S. Attorney Melinda Haag in San Francisco threatened Marin Alliance’s landlord with seizure of the property in addition to up to 40 years in federal prison for drug dealing by providing medical marijuana within 1,000 feet of a Little League field.

The town of Fairfax protested. Then-Mayor Larry Bragman wrote Haag that the medical marijuana provider was legally operating under 84 permit conditions “in a model of effective local oversight.” In follow-up correspondence, Bragman said the dispensary was a critical provider of medicinal relief in a Marin County region with “exceptionally high rates of breast and prostate cancer.”

Nevertheless, the dispensary closed in 2011 under the federal threats.

Shaw said she never earned more than $30,000 a year from the small cannabis club, which at its peak employed seven people and provided marijuana for 2,000 patients a month from some 45 medicinal cultivators.

With her dispensary closed and Shaw barred from working in the cannabis industry as she pursued legal appeals, she went broke. She said she took in as many as four roommates at a time to keep from losing her house to foreclosure.

After last week’s ruling, Shaw said she is looking for investors and engaging Fairfax officials about reopening the dispensary somewhere in town.“I’m now fed-proof!” said Shaw, 61. “Fed-proof nationwide. Thank God!”

But the legal landscape may remain unsettled for Shaw as well as other medical marijuana providers and businesses.

Federal authorities still are pressing a civil case to shutter Oakland’s Harborside Health Center, a massive dispensary that claims to serve 120,000 clients as the largest marijuana provider in the world.

In 2012, Haag filed a property forfeiture case, saying “marijuana superstores such as Harborside” pose a threat to California’s medical marijuana laws by increasing the likelihood of putting “marijuana in the hands of individuals who do not have a demonstrated medical need.”

Steve DeAngelo, Harborside’s executive director, said Breyer’s ruling in the Marin Alliance case means the Justice Department can’t spend any funds to pursue the case based on Congress’ order.

“Our position is they now are prevented from even sending a lawyer into court to argue to close Harborside down,” DeAngelo said. “The only thing they can do is drop the case. Congress has spoken. Obama has signed the bill. It is time for this travesty to end.”

‘They have to obey Congress’

Yet in a conflicting case in eastern Washington, U.S. District Judge Thomas Rice this month imposed federal prison sentences of 12 months to 33 months on three medical marijuana defendants in a group that cannabis advocates dubbed the Kettle Falls Five.

The defendants claimed they were legal medical marijuana patients in a state where both medical and recreational use is permitted. But U.S. prosecutors said their more than 100 total plants violated Washington state’s 15-plants-per-person medical cultivation limit and left them open to federal prosecution for growing marijuana for profit, a charge the defendants denied.

Matt Kumin, a San Francisco cannabis industry lawyer, said he expects the Justice Department to appeal the Marin Alliance case to the U.S. 9th Circuit Court of Appeals, where he said a positive ruling for Shaw is far from assured.

In July, the 9th Circuit Court in San Francisco ruled against a dispensary in that city, the Vapor Room, in a key tax case. The Vapor Room had sought to escape a federal tax statute, which bars business deductions for illegal narcotics trafficking. The Vapor Room argued it was a legally permitted business under California marijuana law. The court said the federal tax statute still applies.

“I have a feeling the 9th Circuit is not going to be friendly,” said Kumin, who said he fears a legal reversal for the Marin Alliance. “I’m not optimistic. That said, every victory we get is huge. The cat is out of the bag. The wall continues to fall.”

For her part, Shaw insists Breyer’s ruling means the wall has indeed fallen – and she is victorious over the federal drug enforcement establishment.

“I’ve never read a decision like this that was just so blazing,” Shaw said. “How are they going to appeal? They have to obey Congress. This decision ends the marijuana war. It really does.

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